FSA orders price comparison sites to provide accurate information

The Financial Services Authority has ordered insurance price comparison websites to overhaul their systems after identifying a string of failings that could mislead customers.

The City watchdog found that many sites encouraged customers to pick products by price without giving enough information about differing terms. Information about excess claims was often inconsistent or wrong.

A number of sites provided incorrect or out-of-date information or prices different from those charged by the broker or insurer, the watchdog found.

The sites should clearly warn customers to examine the features of products, the FSA said. They should also have systems to ensure the correct information is sent to the broker or insurer. The watchdog said it would follow up its instructions by visiting the firms.

Brokers and insurers were also guilty of not providing detailed information before the contract became effective.

Ed Harley, The FSA's head of financial promotions, said: "We are keen that the market develops in a way that ensures customers are treated fairly, and expect comparison sites to provide information that is clear, fair and not misleading. Consumers should shop for the best deal, but it is important that they compare what's covered by a policy, and not just focus on the price."

The regulator looked at the market in 2006 and 2007 but took no action while keeping it under review. It acted now because "aggregator-instigated" sales of private motor insurances had risen to account for nearly 25 per cent of the market.

Stephen Haddrill, director general of the Association of British Insurers, said: "We support their guidance, and plans for regular visits to firms. We also believe the FSA's review should cover all financial services comparison websites."

The watchdog has published advice to help customers at www.moneymadeclear.fsa.gov.uk